Placido Carvalho alias Shanuboy has been charged with supplying drugs to Scarlette as well as rape and murder. His anticipatory bail was rejected by a district and sessions court on Wednesday. Shanuboy's arrest comes 48 hours after a 29-year-old bartender, Samson D'Souza was arrested in connection with the 15-year-old's semi-nude body was found on Anjuna beach.
Samson and Shanuboy were among a group of boys who were last seen with Scarlett on the fateful night.
Shanuboy, who claims to be self employed, was quoted by news agency as telling the police that he had seen Scarlett walking in the shack in an inebriated condition that night and later she had moved out with one Murli who works in a nearby shack called Curlie.
The police have been questioning Shanuboy — and Scarlette's Goan boyfriend Julio Lobo — for some days now.
Samson was arrested after another British tourist (name concealed to protect identity) came forward and claimed he had seen Scarlette in a drunk and inebriated condition a few hours before she was found dead.
The witness told the British media that he had seen Scarlette "in a compromising position" with Samson.
Earlier in the day, Goa police had stated that they are in the final stage and will crack the entire case soon.
"It's just a matter of tying lose ends. We have almost cracked the case," Inspector General of Police, Kishen Kumar was quoted by PTI as saying.
Scarlett's death has snowballed into a major controversy with questions being raised on the safety of tourists in Goa which rolls out red carpet to 24 lakh tourists, including 4 lakh foreigners, every year.
Goa police had initially insisted that Scarlette's death was accidental but filed a murder case after a second autopsy report on her body which recommended that the police should investigate the death as a homicide.
Even as Samson was arrested, Scarlett's mother Fiona Mackowen expressed her doubts about she probe being conducted by state police.